Big Data: a big opportunity for the petroleum and petrochemical industry

• DOI: http://doi.org/10.1111/opec.12118
• Date: 01 March 2018
• Author: Hossein Hassani,Emmanuel Sirimal Silva
• Published date: 01 March 2018

Big Data: a big opportunity for the

petroleum and petrochemical industry*

Hossein Hassani* and Emmanuel Sirimal Silva**

*Organization of the Petroleum Exporting Countries (OPEC), Vienna, Austria. Email: hassani.stat@

gmail.com

**Fashion Business School, London College of Fashion, University of the Arts London, 272 High Holborn,

London WC1V 7EY, UK. Email: e.silva@fashion.arts.ac.uk

Abstract

The Petroleum and Petrochemical (P&P) industry is home to the most traded commodity in the

world, i.e. oil. Recently, this industry has been struggling to make ends meet with top lines being

affected by falling oil prices and bottom lines being squeezed further via increasing operational

costs. It is against this backdrop that this paper seeks to identify and summarise the positive

influence that the adoption of Big Data can have on the P&P industry. Exhaustive research is

carried out on the industry’s engagement and adoption of Big Data in upstream, midstream and

downstream operations to concisely summarise the varied applications and the potential benefits.

Our research indicates that the upstream sector is actively engaging with Big Data to achieve

efficiency gains while the midstream and downstream sectors are lagging behind. Overall, it is

evident that the P&P industry can find solutions to its aching financial and productivity issues by

embracing of Big Data.

1. Introduction

The emergence of Big Data has revolutionised every industry around the globe and, the

petroleum and petrochemical (P&P) industry is no exception. In fact, innovation in oil

and gas is increasingly being used to refer to advances in Big Data, predictive analytics,

data science and machine learning (Cowles, 2015) in an industry where the amount of

data generated is beginning to explode, with sensors collecting real-time information at a

rate of 4 ms (Boman, 2015). The P&P industry, which incorporates upstream, midstream

and downstream processes, is recognised as one of the first sectors to identify and

*Any views expressed are solely those of the author(s) and therefore cannot be taken to represent those

of the Organization of the Petroleum Exporting Countries (OPEC), University of the Arts London or to

their policy. This paper should therefore not be reported as representing the views of Organization of the

Petroleum Exporting Countries (OPEC) and University of the Arts London.

©2018 Organization of the Petroleum Exporting Countries. Published by John Wiley & Sons Ltd, 9600 Garsington

Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

74

understand the countless possibilities which Big Data could bring to the private secto r

(Cowles, 2015; Dyson, 2016).

This is likely a result of the industry requiring large amounts of data to determine

new drill sites and ensure sustainable production, among other tasks. Moreover, reports

indicate that a modern unconventional drilling operation produces up to 1 MB of data

per foot drilled, and it is no secret that such information can be exploited to optimise

drill bit location, improve subterranean mapping, enhance efficiencies related to

production and transportation, and predict the location of the next promising

formation, if analysed appropriately via Big Data analytics (Martin, 2015). Evidence

in (Feblowitz, 2012; Cowles, 2015; Microsoft, 2015a) indicate that the data-driven

P&P industry and its upstream sector is experiencing exponential growth in data

volumes.

Big Data is here to stay, with the market for Big Data solutions and services is

expected to reach $5.41 billion by 2020 (Technavio, 2015). While the concept of Big

Data is relatively new to certain industries, it is not new to the P&P industry as Big

Data’s inherent ability to uncover invisible trends and patterns has long been exploited

by this industry (Dyson, 2016). However, even though P&P companies are investing

increasingly in information technology and analytics (Martin, 2015), as noted in (Dyson,

2016), in comparison to the P&P industry’s interest in innovation-orientated sectors like

the tech sector, the interest shown for maximising the opportunities put forward by Big

Data has been slow moving.

Moreover, according to McKinsey research, the P&P industry only generates value

from a mere 1 per cent of all the data it creates (DiChristopher, 2015; McKinsey Global

Institute, 2015). Given that the world is running low on easily accessed Oil and Gas

(O&G), the P&P industry utilises Big Data analytics to boost production via exploiting

sensors, high-speed communications and data-mining techniques to monitor and fine-

tune remote drilling operations (Leber, 2012). Therefore, it is prudent that we consider

the current opportunities and applications of Big Data in the O&G industry to motivate,

promote and showcase its importance, and related productivity and efficiency gains to

the wider P&P industry. Furthermore, this work seeks to address the lack of relevant

studies in the literature on the uptake and impact of Big Data in the P&P industry, as

was also noted in (Vega-Gorgojo et al., 2016). After all, Big Data is the oil of the new

economy (Baaziz and Quoniam, 2013) and the P&P industry is one where small

improvements in efficiency and productivity can result in significant economic gains

(Cowles, 2015).

In the context of the P&P industry, Big Data refers to large quantities of data coupled

with increasing diversity and rate and is enabling O&G companies to improve efficiency

and reduce costs—a benefit that is being passed on to consumers (Blair, 2015). Figure 1

summarises the 5V’s of Big Data and any Big Data system is expected to deliver one or

©2018 Organization of the Petroleum Exporting Countries OPEC Energy Review March 2018

Big Data: a big opportunity for the P&P industry 75